Lafarge reaffirms commitment to Africa?

06 December 2010

Bruno Lafont, chairman and CEO of Lafarge, has carried out a whistle-stop tour through Africa including visits to Kenya, Cameroon, Nigeria, Zimbabwe, Tanzania and South Africa.

During a stop in Johannesburg, South Africa, Mr Lafont says he has been looking into market trends and the overall investment climate in the countries he has visited, as the company is in a period of renewed growth.

Africa remains a priority for Lafarge. “We are the biggest cement manufacturer in Africa by far. We just doubled capacity in SA — it was a major investment. The company sells its products in more than 20 African countries and has plants in about 15 of them.”

Lafarge is considering growing its business in Namibia and Zambia, and expanding into Angola. But most of all it is positioning itself to take advantage of construction booms in East Africa and Nigeria. Cement demand in those regions is expected to grow 45% this year, much of it driven by government infrastructure projects.

In SA it operates a 2.4Mt facility in the North West. It also has big cement depots in Kempton Park, Polokwane and Richards Bay, and operates 24 quarries across the country.

But cement demand in SA, Botswana, Namibia, Swaziland and Lesotho has fallen for three years in a row, dropping more than 10% in the 12 months to October last year.

SA is facing its worst building and construction recession in 40 years, Paul Stuiver, CEO of Pretoria Portland Cement, warned last month, as the company reported a 15% fall in headline earnings.

He said competition was intense in a market that had seen construction activity in Gauteng plummet 50% since the World Cup, and 40% in the Western Cape. Lafarge says the outlook for SA remains grim well into next year, although Mr Lafont says the overall economy is strong, and SA needs plenty of affordable housing, along with the rest of Africa.

“When we do capex we don’t expect the sky to be blue all the time,” Mr Lafont says. “But Africa needs to work on the cost of energy and on power supply. It’s a precondition for economic development.“ The company mainly bases its hopes on recovery in SA on the government spending on low-income housing and continuing improvements to the road network.

But Human Settlements Minister Tokyo Sexwale said last week that problems with provision of bulk infrastructure such as water, sanitation and electricity were slowing housing delivery. Provinces had spent only 33% of their combined capital budgets this year.
Published under Cement News